And how taking Twitter too seriously might lose money...

A
fake tweet from a hacked Associated Press account hit financial markets
last Tuesday, driving the Dow Jones down about 145 points.

A
hacker group took over the AP Twitter account and reported that
President Barack Obama had been injured in explosions at the White
House.

The single AP tweet stunned investors and effectively
wiped out $136.5billion of the S&P 500 index's value in a matter of
minutes.

The news agency later disclosed that one of its
employees may have inadvertently given away company passwords as the
result of a 'phishing' attack by the hackers.

The study - carried out by academics from Warwick Business School, University College London and Boston University - suggests that a trading strategy based on Google searches would outperform a straightforward buy-and-hold approach.

The research analysed changes in search frequency for 98 words in the period from 2004 to 2011 using Google Trends.

However, it didn't factor in the transaction costs of trading in and out of the market according to the volume of search terms.

'Analysis of Google Trends data may offer a new perspective on the decision making processes of market participants during periods of large market movements”, said Dr Helen Moat, based at University College London.

'It’s exciting to see that online search data may give us new insight into how humans gather information before making decisions - a process which was previously very difficult to measure.'

Dr Tobias Preis of Warwick Business School added: 'We are generating gigantic amounts of data through our everyday interactions with technology. This is opening up fascinating new possibilities for a new interdisciplinary "computational social science".'